Mark Merry flunked out of college. But a degree alone does not a millionaire make.October 22, 2002: 4:26 PM EDT
By Leslie Geary, CNN/Money Staff Writer

New York (CNN/Money) – Mark Merry was a freshman in college when he realized the business degree he was studying for would never make him rich.

It wasn't just that Merry was having problems with his classes -- the St. Paul, Minn. resident flunked out of Inver Hills Community College. But perhaps more importantly, he couldn't envision himself on a traditional career path. The earnings potential of a salaried job seemed too limiting.

"I didn't know what I wanted to do. My older brother and sister went to college. In fact, my brother has graduate degrees, but I'm a hands-on learner. I remember sitting in class and I couldn't grasp theories on how to run a business. I knew something was missing," Merry admits.

So at 18, while the rest of his peers were hitting the books, Merry hit the pavement looking for a job. He dreamed of retiring at 50 and making a lot of money. But his plans got off to a modest start. In fact, his first steady job was working at a printing company where he earned $8 an hour and lived on a diet of "spaghetti and potatoes."

Twelve years later, however, Merry can say he's a success. And though he never set $1 million as a savings target, he's well on his way to becoming hitting that mark -- having amassed $361,282 in personal assets – including equity in his home, retirement funds and savings.

That does not include his business riches - Merry also holds $270,000 in equity in three rental properties in south Minneapolis, plus he owns a mortgage company, Midwest Mortgage Corp. in Edina, Mich., which he and a partner started last year.

Based on Merry's savings rate into his taxable and non-taxable retirement accounts, plus the an annual 6% expected appreciation of his investment properties, he'll hit the $1 million mark in five years, according to our calculator.

So, how did a college drop-out make good?

Merry had weapons working in his favor: confidence and optimism. He ignored the statistics that show people with college degrees earn the best salaries, and he refused to believe he was destined to be poor.

"Those were humbling times," said Merry, thinking back to days when he searched for change in his couch so he could fill his car with gas.

One time he told a date: "Watch, one day I'll have money and a nice car."

"She was like 'Yeah, sure,'" he said. "I told myself 'I'm going to make it. I'm going to show people that Mark Merry isn't a failure.'"

To that end, Merry's biggest success may have been his eagerness to follow sound financial advice.

When the printing company's benefits counselor gave a presentation on 401(k) plans, for example, Merry listened hard and immediately socked away 10 percent of his paycheck. The way he figured it, stashing those pre-tax dollars into a retirement fund didn't make a difference in his day-to-day standard of living since he was earning so little anyway.

"I actually just got used to not having money," he recalls. "No matter how badly I needed the money I kept contributing."

His yearly savings amounted to $500 a year. Today his 401(k) is worth over $42,000.

Meanwhile, Merry kept his eyes open for career ideas and noticed that the sales reps at the printing company had opportunities to make fat commissions. He decided to go for a sales position where his earnings potential would be limited by his ability, not a yearly salary cap. As luck would have it, Merry's roommate (he couldn't afford to rent his own place) helped him get a job where he had the opportunity to earn big commissions – or fall on his face - as a mortgage lender.

"The scariest, and single biggest move, in my life was leaving a solid job to become a 100 percent commission person. Going for commission, you really lay everything on the line," Merry said. "Then one day you say, 'I have $40,000 in my checking account. I don't need to worry."

It turned out, Merry had an affinity for sales work, and he liked the people he worked with. And again, he was quick to notice which of clients were making money: the ones who bought rental properties as investments. So he started reading books about rental properties, and when he had enough money, he bought his first home in 1998.

He opted for a duplex for two reasons. First, he needed a place of his own so he could quit renting. And he figured if he had a second apartment he could rent it out and tenants' lease money would help him pay off much of his mortgage. As it turned out, Merry's personal housing costs dropped to $300 a month after leasing out the spare place. He then turned around and plowed his housing "savings" into his 401(k) plan.

"Plus, I owned an appreciating asset along with a tax write-off," said Merry. "It was perfect."

Today the duplex is worth about $265,000 and Merry owes $128,000 on it. He's also bought a town home he picked up during a foreclosure as well as a four-plex. Both are rentals.

Before he buys, Merry always asks himself, "Is this an area where I can rent?" If it's not, he holds on to his money.

"My main philosophy is capital preservation," notes Merry, who's put his entire 401(k) into the Pimco Total Return Bond fund after moving that money from tech-, large- and mid-cap funds. He's also taken more than $155,200 that was in his stock account and put it in money market funds after years of making money on hot Internet stocks. In fact, the few times he was burned on tech stocks "was enough for me to know that losing hurts," he said.

Merry's been equally careful about buying his own home. Instead of buying a huge house, he stuck to a three-bedroom dwelling that's perched near a golf course. He lives in it with the same girl he tried to impress way back when he was tooling around in a beat-up old Honda. Her name is Shannon Merry and she became his wife two months ago.

"Shannon understands where I came from," says Merry who now drives a 3-year-old Audi that he has no plans of trading in any time soon.